Amazon focus on essentials sows panic, confusion among merchants

(Bloomberg) – Amazon.com Inc’s delivery delays of non-essential goods will extend for at least another month for many customers in the US and Europe, stirring panic among online merchants who rely on the web retailer for business.

The lengthening delivery times come on top of confusion over how the company identifies essential products, a task that appears to be performed by algorithms with little human oversight.

Online merchants became alarmed Sunday when they saw delivery dates pushed into late April, meaning many of them will lose more than a month of sales in the fallout from the coronavirus outbreak.

Amazon is struggling to cope as the Covid-19 pandemic escalates in the US, forcing factory shutdowns and snarling logistics nationwide.

The shipment holdups apply to a broad range of products in various categories, including bird feeders, kitchen towels and chalk.

Some Amazon merchants derive 90% or more of their sales on the platform because it dominates online shopping in the US.

“Amazon is letting me sell aquarium filters but not vacuum bags and air filters,” said Chad Rubin, who sells various products online and also makes software for online merchants through his company Skubana.

“Sure, the fish are important, too, but this is just wacky. People need air filters.”

Tens of millions of products on Amazon sold by approximately 250,000 merchants won’t be available to many Amazon shoppers until late April at the earliest, said Juozas Kaziukenas, founder of the New York research firm Marketplace Pulse that monitors the site.

“This is the biggest disruption Amazon has ever seen, and it will see sales decrease as customers turn to shop elsewhere, looking for faster delivery,” he said.

“The impact on sellers is going to be heartbreaking.”

Many merchants – who provide about half the inventory sold on the web store – rely on in-house delivery service Fulfillment by Amazon to reach customers quickly and efficiently.

Expected delivery appears to be slowest for Amazon shoppers who don’t pay monthly or annual fees for Prime, which includes shipment discounts and other perks.

Amazon is struggling to keep up with a surge in orders from customers buying groceries and other household necessities online in order to avoid crowded stores.

The company on Tuesday announced it would stop accepting shipments of non-essential goods to its network of warehouses where inventory belonging to independent merchants is stowed, packed and shipped to Amazon customers.

The aim is to keep warehouses stocked with the items people are buying now – toilet paper, bleach and sanitising wipes.

That means the e-commerce giant is temporarily not accepting shipments of non-essentials like flat-screen televisions and toys.

Amazon is also under pressure to keep its warehouse workers and delivery drivers safe since they continue working while others remain home. It announced plans to hire 100,000 workers and give temporary pay increases in order to meet demand.

“To serve our customers in need while also helping to ensure the safety of our associates, we’ve changed our logistics, transportation, supply chain, purchasing, and third-party seller processes to prioritise stocking and delivering items that are a higher priority for our customers,” Amazon said in an emailed statement.

“This has resulted in some of our delivery promises being longer than usual.”

Desert Cactus, a Chicago-area company that sells collegiate bumper stickers and license plate holders on Amazon, had to lay off several workers since sales dried up as a result of the outbreak, president Joe Stefani said.

Workers laid off include those who prepare products to be shipped to Amazon warehouses since those shipments are no longer being accepted, he said.

“These new restrictions hurt our business,” he said.

Some Amazon merchants are actually seeing sales spike.

Molson Hart, whose company Viahart sells games and toys on Amazon, said his sales are up from parents looking to keep children occupied while they are home from school.

“All of our indoor toys are up, but we aren’t selling many kickboards though,” he said.

The demand uptick has spread beyond obvious items like toilet paper and hand sanitiser to pet food and other products, said Guru Hariharan, a former Amazon executive and founder of CommerceIQ, which makes software to help businesses sell products on the site.

”People are buying batteries for their flashlights and they’re working from home so they’re buying webcams,” he said.

“There’s a surge in a lot of categories.”